Understanding India’s streaming platforms industry in the context of lockdown

Sector experts believe that because of potential threat of contracting with the Coronavirus, people may avoid group engagement activities such as watching films in theatre for a long time. Considering this fact, producers are releasing films slated to be released in theatres on streaming platforms.

Film-makers point out that in the near future certain Hindi films will be made under a budget that even if they get released straight on streaming platforms the producers will not lose much money.

In the book Folktales From India—a precious contribution to Indian culture—poet, and an authority on Indian aesthetics A K Ramanujan narrates a South Indian folktale. The folktale is called Losing a Self. It is a story of a Guru and his twelve idiot disciples. They want to cross a river. But the river is treacherous. They wait for some time. After making a firm resolve, they cross the river. As they reach the other end, a disciple starts counting to ascertain whether all were able to cross the river. He counts everyone except himself. All believe that one person died while crossing the river. But they are unable to figure out who died. A magician passing by listens to their problem patiently. He reassures them that he will solve this conundrum. He asks a disciple to bring cow dung and make a long line of cow dung. After asking all to stand in a row in front of the cow dung line, he asks all to bend down and press their noses in the dung. He asks them to count the number of dents in the cow dung. They unanimously agree that the number is thirteen and realise no one has died while crossing the river. In an allegorical sense, this folktale—like many folktales which have a certain amount of truth in them—reflect an inveterate tendency in entertainment industry to spell doom for cinema and theatre every time a ‘new avenue’ of entertainment gains high acceptance among viewers.

In almost every evolutionary phase, it is assumed that a new avenue of entertainment will make the old or already existing avenues of entertainment irrelevant or unprofitable. It started with the advent of television. This was followed by huge acceptance of cable television and watching films at home by renting movies from video library, proliferation of private television channels, and Direct-To-Home (DTH) services. Throughout these phases, a constant concern is piracy, which still persists. And now, the latest threat or a concern is increasing acceptance of streaming platforms as a serious contender which can jeopardise the existence of theatre and the way we watch cinema or consume content. These observations have found more relevance in the context of lockdown which has made a large section of viewers realise the power of streaming platforms in providing engaging and entertaining content.

Sector experts believe that because of potential threat of contracting with the Coronavirus, people may avoid group engagement activities such as watching films in theatre for a long time. Considering this fact, producers are releasing films slated to be released in theatres on streaming platforms. Given these new realities, a few key questions which have popped up in minds of experts and viewers are: Will streaming platforms define the way we watch films as more and more films are being released on these platforms? Will theatre lose its relevance as the costs attached to watching a film in theatre are not economical in comparison with watching a film on a streaming platform in a well-equipped surround sound home-theatre environment? What exactly has happened with the advent of streaming platforms to other avenues of entertainment in India? And most importantly, like the South Indian folktale, will streaming platforms co-exist with the old or already existing avenues of entertainment such as television and theatre? Let us understand these aspects in detail:

The rising waveFor a long time before private channels proliferated, viewers shared a common experience of watching serials on the government-sponsored channel Doordarshan. These serials had substance, entertainment value and a certain touching simplicity of presentation which had elements to make them stuff of nostalgia. Even today these serials are re-watched with the same fervour and warmth as they were watched when they were shown on Doordarshan. From mid-1980s, serials such as Hum Log, Buniyaad, Nukkad, Ramayan, Mahabharat, Byomkesh Bakshi, Vikram Vetal, Trishna, Oshin and Kirdaar showed that in a limited episode format one could entertain and appeal to a wide and vast audience. These serials were based on literature, true events, original ideas and mythology. In a clear sense, these very ingredients make streaming platforms a unique offering today. The experience of watching serials in the mid-1980s on Doordarshan has been almost similar to what today’s audience experience watching web series on streaming platforms. The only difference is web series on streaming platforms have better production value than the serials on Doordarshan. This aspect may give a sense of novelty to what streaming platforms have to offer.

In the mid-1990s, things changed drastically. A large number of private channels were launched as the power of television as a medium of reaching out to a wide audience was acknowledged and recognised by producers and advertisers. Television provided a viable economic model of making money for creators and investors. This resulted in what usually happens when too many players enter an industry. When a structure and the costs associated with that structure are not so high, creative freedom is also high. Such structures are congenial for creating artistic content. But when structures grow and evolve as more players enter and compete, creative freedom gets sacrificed and more importance is given to the viability of the content. In such a structure, ‘science’ prevails. The focus shifts to creating serials which can be elongated and are not tight enough from providing wholesome and meaningful entertainment in limited episode format. This is because such a structure is remunerative for producers in terms of television rating points and hence, advertisements. Consequently, serials became imitative and monotonous. This brought division in categories of audiences.

The audience which craved for wholesome, meaningful and thought-provoking entertainment was utterly ignored. Infrequently, this audience satisfied this taste from films or some serials which showed the promise of good entertainment in the early phase but subsequently conformed to the format dictated by market forces. This created division among audiences and it became clear to advertisers that the target audience for general entertainment content on television will be non-working women and men will be interested in sports and non-entertainment channels.

Over the years, a few categories of audiences, which already existed, exhibited their distinction in the way they watched content. These categories showed a clear trend how content will be consumed in theatre as content on television became extremely formulaic, imitative and sterile. Broadly speaking, six categories of audience emerged in the two decades. Firstly, there is an audience of evolved taste. They are nothing but discerning audience. They have access to information and they understand what they like and what they don’t like. This category basically is a torrent audience who download films from the internet. Then, there is an audience which, largely, catches up with others around them. This audience gets disappointed far often than the evolved audience because it goes to theatre more often than the audience of evolved taste. Then, there is urban audience which just seeks pure entertainment. This audience does not have keen interest in cinema. They don’t have any viable and equally interesting means or avenues of entertainment on weekends. For them, going to theatre for a film is a family outing. This ritual borders on discharging family duty of taking care and being considerate towards wife and kids.

This category is followed by lower middle class, which is the staple audience for Hindi movies. This audience has sustained the formula on which the juggernaut called Hindi cinema has been established. A film which merges known tropes without making it esoteric and presenting it in a fresh way is an event for this audience. Watching films in theatre is a strict ritual for this audience because it is like a spiritual ceremony in dark which gives them intense happiness. This is the most stable theatre goer. The fifth category is the audience which is in tier-II and tier-III cities. This audience in tier-II and tier-III cities is driving revenues at the box office because of two reasons. One, multiplexes have expanded in these locations rapidly in the past five years as space constraints and rising costs in cities make expansion outside metros more feasible and viable. Two, audiences in tier-II and tier-III believe the ritual of going to multiplexes as one of the ways they catch up with city-dwellers. And lastly, there is rural audience which is undemanding and is content with what comes its way.

Increasing predictability of content on television, rising ticket prices, economical internet packages (the launch of Jio services has played a critical role in this), exposure and understanding of well-written and superbly executed English and non-English content from the west, easy access to films through piracy and most importantly, the freedom to watch content at one’s subjective pace and convenient time without the patience-testing advertisements sowed the seeds for a much-needed space for an offering for the audience with evolved taste. Streaming or Over The Top (OTT) platforms filled up this space in the past five years.

Today, in India, there are close to thirty-six streaming platforms which are owned by Indian companies. Apart from these, there are global streaming platforms such as Netflix, Amazon Prime Video, and Disney+Hotstar.

Since the lockdown it is clearly evident that the awareness and importance of streaming or OTT platforms has increased. According to various estimates and reports, there has been jump of 8-100% in subscribers’ addition of major OTT platforms. According to industry experts, the lockdown has helped OTT platforms secure new subscribers. Even the average age of the subscribers’ universe has increased. Film-maker Shivdarshan Sable says, “I think this is clearly evident that the lockdown has been a blessing in disguise for streaming platforms. Earlier, the average age of the subscribers’ universe might be less than 30. Due to lockdown, I think the average age of the subscribers’ universe has gone up. I am certain that today a fair share of the new subscribers added will be in the age group of 35-55.” This means that there are an increasing number of people who are acknowledging the engaging and superior production value of the content offered up by streaming platforms.

The recent flurry of release of Hindi films on streaming platforms also add to their increasing importance as it shows that producers have acknowledged the potency of these platforms in distributing content and reaching out to a large universe of viewers. Amazon Prime Video has acquired seven Bollywood and regional films. A noteworthy aspect about this flurry of release is they also include films boasting big stars and well-known directors and producers. A case in the point is the film Gulaabo Sitabo. Well-established and critically-acclaimed director Shoojit Sircar directed the film which has successful pairing of the man with a Midas touch Ayushmann Khurrana and Amitabh Bachchan.

Is there an impact?Now, in this context of the increasing importance of streaming platforms among viewers and producers for content consumption and distribution, one needs to understand whether business in television or theatre affected.

Gauging the pattern of how television and streaming platforms are providing content, it is evident that television and streaming platforms feed into each other. It has been observed that the content generated by television finds its place in the catalogue or offerings of streaming platforms also. The famous TV series Kyunki Saas Bhi Kabhi Bahu is available on streaming platform Disney+Hotstar. It is also observed that broadcast-backed streaming platforms show the content of their streaming platforms on their respective channels. For instance, the content of Zee5, a streaming platform of Zee Entertainment Enterprises, is being shown on its channels also and vice versa. This aspect of feeding into each other is likely to prolong the relevance of television and quell any kind of panic-driven knee-jerk assumption that streaming platforms will kill television.

Besides this, television will serve its purpose in different ways. The emergence of Smart Television with surround sound home theatre facility gives a new purpose of watching content of streaming platforms on television. Also sporting events which require bigger screen than mobile devices will also justify the existence of television. Most importantly, India’s infrastructure will provide longer life for television to exist because broadband and telecommunications connectivity are yet to penetrate deeper in locations beyond tier-II and tier-III cities. This is evident from the fact that one of the most highly watched series during lockdown period was the re-run of the serial Ramayan on DD National. This indicates that there is no threat for TV from streaming platforms.

Even as regards theatre, streaming platforms have not been a threat to their business model. It has been more than five years global streaming platforms have entered into India. And encouraged by them, television channels launched their own streaming services. In the past five years, there has been no impact on footfalls in theatres. Footfalls in two major multiplexes such as PVR and Inox Leisure have grown in this period. Footfalls in PVR and Inox Leisure grew to 99.4 million and 62.5 million respectively in FY19 from 59.9 million and 38.6 million respectively in FY14. Also an analysis of financial performance of these multiplexes before the advent and after the advent of streaming platforms (FY14) shows that there has been reasonably good growth in revenue per screen before and after FY14.

Revenue per screen for Inox increased to Rs2.9 crore in FY19 from Rs2.6 crore in FY14. Similarly, for PVR, revenue per screen increased to Rs4 crore in FY19 from Rs3.1 crore in FY14. Also the number of films which recorded more than Rs100 crore at the box office jumped close to two times to 13 in FY19 from seven in FY14, points out a KPMG report. Even the box office collections have grown to Rs3759 crore in FY19 from Rs2493 crore in FY15. This is despite the fact that the average ticket price of multiplexes has been rising in the range of 5-8% in the past five years. This shows that streaming platforms have not created any material impact on theatre business as it is content which attracts viewers to theatres not just the ‘avenue’ of entertainment.

The moot questionThough till last year, streaming platforms have not hurt the theatre or movie business, due to the recent announcement of films to be released on streaming platforms in the coming months, there is an increasing concern over the future of movie and theatre business. This is because digital release does not fetch returns as high as theatrical release. According to an analysis of auditing firm KPMG, around 75% of overall revenue on a film comes from big screen cinema release while digital makes up 13% and the rest from television and satellite broadcasting. Given the small share of revenues streaming platforms generate, it is unlikely it will jeopardise the business model of movie and theatre business.

Besides this, it is the very structure of content offering of streaming platforms works in the favour of movies and theatre business. This is because the structure does not appeal to all kinds of audience. In recent years, there have been a few observations of well-known film-makers which amply explain the fact that cinema or movie business is likely to remain and will charm the audience for years to come. There are three key observations of famed and critically acclaimed film-makers why cinema or theatre as an avenue will survive and not lose its relevance. These comments centre on the very structure of streaming platforms. Director Oliver stone, in an Oxford Union dialogue, said that the content on streaming platforms is journalism and cinema has a quality of literature. He said, “It (content on streaming platforms) makes the first draft longer...a first draft of history. In other words, it is like a journalistic account. You have to go deeper and that is what makes movies interesting. Once you get to a movie usually years later you really can go in there and try to see the patterns at work.” Also director Alfonso Cuaron, in the YouTube channel BAFTA Guru said, “What we are experiencing on platforms is not necessarily cinema. It is more connected with television. I am lost in a series not because of its cinematic value of the series. I am getting lost in a story. In many ways, it is becoming a media for lazy readers. What I am more intrigued about is cinema.” An interesting remark of director Joel Coen of director duo Coens Brothers also shows how the structure of content of streaming platforms does not pose a threat to movie and theatre business. He said the content on streaming platforms has start, middle but no end and goes on and on. Cinema, on the other hand, has an end which gives it a sense of finality in presentation in limited time.

Also the structure of content offering on streaming platforms entails long hours of watching comes with its own health problems. Dr. Priyanka Shah Dattani, Counselling Psychologist at NH SRCC Hospital, Haji Ali, Mumbai said, “I think these platforms are largely about the concept of indulgence. Earlier you would wait for things which would delay gratification. But this concept of ‘binge watching’ for instant gratification is a serious matter which needs pondering. One of the serious repercussions is this whole exercise numbs you out. You become emotionally numb. In psychology, it is said you can heal what you feel. But when you are emotionally numb it becomes difficult to assess exactly what is the problem. It results various kind of mental and physical ailments such as depression and Spondylitis due to continuous watching of content.” She added, “Besides, one does not build any social skills as interaction with the outside world is bare minimum. The whole process disconnects you from the outside world and provides you an alternative reality within the confines of a virtual world. This is suspension from reality and it disconnects a person from her inner world. One hardly acquires any skills.” She pointed, “As regards adults, stress levels have gone up. The idea of recreation has changed to watching content on these platforms rather than talking to child or spouse. Children are lot more affected than adults. Since they have more time and chemically wired to emulate adults, their sleep pattern is massively affected. A lot of children are sleeping as late as 2 am. Across the board one can see how the content has created distraction affecting relationship, work and productivity. ”

In a sense, streaming platforms are like television channels only. They show programmes on digital platform. The only difference is OTT platforms provide content to the viewer in the following manner: When they want, where they want and how they want. This means there is convenience and freedom to viewers to watch content anytime and at any point in the narrative of a series. Though these platforms have created a perception that they cater to a certain category of viewers, in truth, they are merely creating “library” of content. It is clear that they want to cater to all and sundry. This is evident from how content is delivered on these platforms. These platforms provide subtitles. One can listen to the narrative of a series in more than language (includes regional languages) apart from English. According to Ernst & Young, Indian consumers prefer to watch videos in vernacular and regional languages. In India, close to 93% of the time spent on videos is in Hindi and other regional languages. As a result, streaming platforms have content which go beyond Hindi and English and reach out to these consumers.

Another aspect of business model of streaming platforms is what looks like the strength of these platforms can also be its limitation. These platforms sustain on creativity, which unlike plain advertisement model, does not make up for fickle pattern of subscription. According to several research studies, viewers have shown clear preference for original and fresh content. This shows that subscribers are more interested in fresh and original content, which is a tall order to a certain extent. Given these realities, viewers will not be glued to their OTT screens and will step out of their comfort zones and watch films in theatres.

In the coming years, one is likely to see three trends in the context of increasing acceptance of streaming platforms. One, mid-budget and low-budget films may straight away release on streaming platforms. This trend is already evolving. But it will become more prominent. This is because of two reasons. One, high cost involved in promoting or publicity of a mid-budget or low-budget film. A mid-budget film costs Rs25-40 crore and a low-budget film is made in less than Rs25 crore. But publicity is a huge expense. A case in the point is director Apoorva Lakhia’s film Haseena Parkar released in 2017. The director in an interview mentioned that the film was made for Rs 11 crore and the publicity budget of the film was Rs 8 crore. Two, low-and-mid-budget films have to compete with big-budget films, which occupy disproportionately higher screens in theatres.

The second trend is the change in economic model of film-making. Film-makers point out that in the near future certain Hindi films will be made under a budget that even if they get released straight on streaming platforms the producers will not lose much money. Lastly, streaming platforms industry will consolidate. Presently, there are thirty six OTT or streaming platforms. This means there is intense competition among streaming platforms to attract viewers in times when viewers are spoilt for choice regarding content. Streaming platforms do not follow the traditional advertisement-based revenue model which means that they have to rely on huge cash which may result in high debt for companies. Also subscribers are largely fickle and they switch their accounts to different platforms as and when they find a series exciting.

Only those platforms which have backing of strong balance sheet and moneyed or strategic investors will survive and acquire weaker players who may die a natural death due to lack of funds. According to industry veterans, the budget of a web series is almost similar to a film’s budget. A web series is shot as a film and cut and edited in episodic format. This requires more money than television series where money is provided on each episode basis and locations are mostly interior. This will put pricing pressure on streaming platforms. It is quite likely that broadcast-backed and international streaming platforms will survive. They have long experience and brand power, which will help secure funds.

In the overall scheme of things, most avenues of entertainment will co-exist because they will not only feed into each other but also independently and distinctly serve their purpose. It has been observed that even feature length film directors produce work exclusively for OTT platforms. In addition to this, they make films which are released only in theatre first and then on OTT platforms. Theatres will release films which will be experiential in nature and can only be enjoyed better in theatres than any platform. Television will also survive as it serves a break from theatre and OTT platforms. But OTT platforms face two major threats. These are piracy and censorship. If the government changes censorship rules and brings out fresh rules for streaming platforms industry, then it may affect the quality of content on streaming platforms. This is because censorship will curb creative freedom, which is the fundamental reason for the huge acceptance and success of content of streaming platforms. Also piracy, which affects cinema, affects OTT platforms.

In the context of these realities, it will be the viewers who will benefit amply. They will continue to have access to humongous content. The various avenues of entertainment—television, OTT, cinema and other social media platforms—have created a food thali which satisfies hunger of almost all kinds of viewers. But the appetite of viewers is also humongous. The content creators know whom they are serving. To borrow a phrase of poet Dom Moraes’ writings, the content creators know that they are serving ‘a ferocious master’ in viewers. In the coming years, the success and longevity of these avenues of entertainment will be tested in this question: Are viewers watching content because they have time at hand or the content is so good that viewers are making time to watch it?